2004-05 NHL lockout

The 2004-05 NHL Lockout resulted in the cancellation of what would have been the 88th season of the National Hockey League (NHL). It was the first time the Stanley Cup was not awarded since 1919, and the first time a major professional sports league in North America canceled a complete season due to a labor dispute. The lockout lasted 310 days starting September 16 2004, the day after the collective bargaining agreement (CBA) between the NHL and the NHL Players Association (NHLPA) that resolved the 1994-95 lockout expired. The negotiating teams reached an agreement on July 13, 2005, and the lockout officially ended nine days later on July 22, after both the NHL owners and players ratified the CBA.

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The NHL, led by CommissionerGary Bettman, attempted to convince players to accept a salary structure linking player salaries to league revenues, guaranteeing the clubs what the league called cost certainty. According to an NHL-commissioned report prepared by former U.S. Securities and Exchange Commission chairman Arthur Levitt, prior to 2004-05, NHL clubs spent about 76 percent of their gross revenues on players' salaries – a figure far higher than those in other North American sports – and collectively lost US$273 million dollars during the 2002-03 season.

On July 21, 2004, the league presented the NHLPA with six concepts to achieve cost certainty. These concepts are believed to have ranged from a hard, or inflexible, salary cap similar to the one used in the National Football League to a centralized salary negotiation system similar to that used in Major League Soccer. According to Bettman, a luxury tax similar to the one used in Major League Baseball would not have satisfied the league's cost certainty objectives. Most sports commentators saw Bettman's plan as reasonable, but some critics pointed out that a hard salary cap without any revenue sharing was an attempt to gain the support of the big market teams, such as Toronto, Detroit, the New York Rangers, Dallas, and Philadelphia, that did not support Bettman during the 1994-95 lockout.

The NHLPA, under executive director Bob Goodenow, disputed the league's financial claims. According to the union, "cost certainty" is little more than a euphemism for a salary cap, which it had vowed never to accept. The union rejected each of the six concepts presented by the NHL, claiming they all contained some form of salary cap. The NHLPA preferred to retain the present "marketplace" system where players individually negotiate contracts with teams, and teams have complete control of how much they want to spend on players. Goodenow's mistrust of the league was supported by a November 2004 Forbes report that estimated the NHL's losses were less than half the amounts claimed by the league.

Although the NHL's numbers were disputed, there was no question that the league was in serious trouble since NHL franchises have been in financial trouble since the advent of the league, or at least according to claims made by the franchise owners over the years. Several franchises had declared bankruptcy. TV ratings were a distant fourth compared to the NFL, NBA, and MLB in the US, and many NHL teams had low attendance totals in recent seasons. At the same time, commentators feared that irreparable damage would be done to the NHL if a strike or lockout occurred, and that was likely since the owners and players were far apart on key issues.

Prior to the lockout, in late 2003 the union proposed a system that included revenue sharing, a luxury tax, a one-time five percent rollback in player salaries, and reforms to the league's entry level system. The league rejected this proposal almost immediately because it essentially maintained the status quo in favor of the players. Shortly before the lockout commenced in 2004, the NHLPA offered another proposal to the league that was believed to be similar to their earlier proposal. The league again rejected the union offer, claiming the union's new proposal was worse than the offer they rejected in 2003. At this point, negotiations stopped until early December, when the NHLPA made a highly anticipated proposal based on a luxury tax that increased the proposed one-time rollback in players' salaries from 5 to 24 percent. The NHL rejected the offer and countered with a proposal that the union quickly rejected.

In late January 2005, near what the hockey media believed to be the point of no return for the 2004-05 season, discussions were held by the negotiators from both sides, excluding Bettman and Goodenow. The NHL was represented by Executive Vice President Bill Daly, outside counsel Bob Batterman, and NHL Board of Governors Chairman Harley Hotchkiss, who also co-owns the Calgary Flames. The NHLPA was represented by President Trevor Linden, Senior Director Ted Saskin, and associate counsel Ian Pulver. After four meetings, the sides remained deadlocked due to, according to Saskin, "significant philosophical differences." Shortly after this series of meetings, Daly presented Saskin a proposal that the league believed made a number of concessions to the players, but was still based on a salary cap linked to revenues. The players' association rejected the proposal, saying that it was "not the basis for an agreement."

After these negotiations failed, on February 9, Bettman declared that if the lockout was not resolved by the weekend, there would be no hope of saving the season. When talks broke off between the NHL and the NHLPA the next day, there had been no progress in negotiations. On February 14, the union offered to accept a $52 million salary cap under the condition that it was not linked to league revenues. The league proposed a counteroffer with a $40 million cap plus $2.2 million in benefits, which the players association refused. The next day, Bettman sent Goodenow a letter [1] with a final proposal of a $42.5 million cap plus $2.2 million in benefits, setting a deadline of 11:00AM the next day to accept or refuse the offer. The NHLPA presented a counter-offer involving a $49 million cap, which the league denied.

With no resolution by the 11:00 deadline, Bettman announced the cancellation of the 2004-05 season on February 16, 2005, making the NHL the first major professional sports league in North America to cancel an entire season because of a labor dispute. However on February 18, The Hockey News reported that a deal with a $45 million cap had been reached "in principle" with the help of owners and former players Wayne Gretzky, and Mario Lemieux. Both camps immediately denied this report. A 6½-hour meeting took place the next day, but no agreement was reached.

Bolstered by the thought of losing yet another season to a labor dispute, the sides began meeting again in June, with many pundits believing the lockout would end on July 4, 2005. That date eventually came and went, but sources were reporting to media that marathon sessions were taking place. Indeed, the sides met again for ten consecutive days (July 4–13), and a deal was reached "in principle" (meaning the sides have agreed, but nothing is signed) on July 13. According to reports, the July 12 session lasted through the night and until 06:00 on July 13, at which point the talks broke off for five hours, and resumed in time to complete the deal. Both sides wanted to make an announcement that day, as it was the day following the Major League Baseball All-Star Game – the only day in the calendar year when none of the four major North American team sports has an event scheduled.

On July 21, the players association ratified the agreement with 87 percent of its members voting in favor. The owners unanimously approved it the next day, officially ending the 310 day lockout with a $39 million cap for the first year of the CBA.

A Canadian public opinion poll conducted by Ipsos-Reid near the start of the lockout found that 52 percent of those polled blamed NHL players for the lockout and only 21 percent blamed the owners of NHL teams.

This may have been due to the fact that the NHL put much more effort into the public relations war than did the NHLPA, leading to a large amount of one-sided public feeling on the issue. The NHLPA did not change its position despite public opinion against them and reiterated that irresponsible big market NHL owners were to blame for driving up salaries.

However, many doubt the sincerity of the NHLPA since union leaders desired a system that allows big market owners to do exactly that. Also hurting the NHLPA was the fact that its players had very visible high salaries, which removed much sympathy from lower-to-middle class fans. It did not help that Jeremy Roenick and several NHLPA executives had made controversial statements which showed their apparent disdain for owners and fans alike.

Some of the owners, notably the big market teams, were criticized upon refusing to commit to lowering ticket prices if a salary cap was successfully implemented, but others argued that there was no correlation between player salaries and ticket prices (ticket prices are determined by demand).

The loss of the 2004-05 season meant that there were no results on which to base the order of the 2005 entry draft. The league settled on a lottery system in which all teams had a weighted chance at the first pick, expected to be Sidney Crosby. The lottery was tilted so teams with fewer positive results over the past five seasons had a better chance of landing higher picks. The complete order was determined by the lottery, and the 2005 draft was conducted in a "snake" style, meaning in even rounds, the draft order was reversed. This system was an attempt to compromise between those who felt all teams should have had an equal chance at the first pick and those who felt only the weaker teams should have been in the running.

To ease the transition to the salary cap, teams were allowed one week to buy out players at two-thirds the cost of their remaining contract, which would not count against the salary cap. Bought out players could not re-sign with the same team.

NHLPA Executive Director and General Counsel Bob Goodenow, seen by many as the biggest villain in the lockout due to his hardline stance against a salary cap, resigned from his position five days after the agreement was ratified amid criticism from many of his constituents. He was replaced by Ted Saskin, formerly senior director of business affairs and licensing for the NHLPA. Saskin was officially named executive director of the NHLPA on November 25, 2005, after the players' vote of confidence was confirmed by accounting firm PricewaterhouseCoopers

NHL Executive Vice President and Chief Legal Officer Bill Daly was promoted to deputy commissioner after the lockout. Both Saskin and Daly had played a key role in brokering the current agreement

There were two attenpts to for professional leagues in North America during the lockout, but both failed. The New World Hockey Association had been planned since 2002 and was to start play shortly after the lockout was expected to begin. Despite having former WHA star Bobby Hull as commissioner, however, the league never got off the ground. A lack of stable financing undermined plans to sign both locked-out players and top prospects such as Sidney Crosby.

Another league, the Original Stars Hockey League (OSHL), had been established in Canada and was expected to play four-on-four exhibitions games in various Canadian cities, until the lockout was settled. More than 100 players, including Dominik Hasek, signed up to play in the OSHL. However, escalating salary demands by players quickly bankrupted the OSHL after a few exhibition games. The league did not play any further games.

NHL players looking for a place to play clearly preferred stable, established European clubs to upstart leagues that have since been derisively dubbed as "fly-by-night" operations by their critics. A small number of players played for established minor league teams near their homes and families, while others chose to repay the league which gave them a start by returning.

In the Western Hockey League, the Calgary Hitmen were the most watched team in North America, averaging 10,062 fans per game. Their season total of 362,227 shattered the WHL and CHL records[1] and represented a 33% increase over 2003-04.[2] The Vancouver Giants also experienced a massive increase, finishing second in the WHL with 302,403 fans going through the turnstiles.[2]

The lockout had a substantial effect on international tournaments run by the International Ice Hockey Federation. The most notable effect was in the recent 2005 World Junior Ice Hockey Championships in Grand Forks, North Dakota and Thief River Falls, Minnesota. With the NHL inactive, the top eligible U-20 players were not playing in that league and thus were available to their countries for the tournament. The country that benefitted most as a result was Canada. The Canadians not only ended a seven-year gold medal drought at this competition, they outscored their opponents 41-7 and defeated Russia 6-1 in the final game. Many analysts believe that the Canadian team was the most dominating ever in this tournament, aided in no small part by players such as Patrice Bergeron who could have expected to have commitments in the NHL.

At the time that the 2004-05 season was canceled, it was not immediately clear how the lockout would affect the 2005 World Ice Hockey Championships. Normally, NHL players from teams that failed to qualify for the Stanley Cupplayoffs participate in this tournament. Since no playoffs were being held, theoretically all NHL players could participate. In reality, however, many NHL players declined to participate, and national teams were naturally reluctant to select players who lacked game conditioning. For all of the teams (including the North American ones), the bulk of the national teams' rosters consisted of players who were playing in Europe.

Canadian sports fans also turned to the Canadian Football League, and the CFL recorded significant increases in attendance and television ratings during the final weeks of the 2004 CFL season compared to 2003, ultimately setting a new record for total playoff attendance. The league was able to hold onto at least some of these gains in 2005.

The Philips Arena requested the Southeastern Conference to move the SEC Women's Basketball Tournament out of their venue because of logistics, because the 55th NHL All-Star Game was scheduled for late January, while the SEC tournament was scheduled five weeks later. The resulting move led to the Bi-Lo Center, an ECHL arena 140 miles to the east in Greenville, South Carolina, hosting the tournament, drawing the ire of the NAACP, which wanted the SEC to ban the venue from hosting tournaments because of its location. Philips Arena was granted the NHL All-Star Game in 2008 as compensation.